The owners of US satellite/terrestrial venture LightSquared and its creditors have been ordered to resume mediation talks to agree a restructuring deal for the spectrum-rich business, which has been in Chapter 11 bankruptcy since May 2012.
Judge…
The owners of US satellite/terrestrial venture LightSquared and its creditors have been ordered to resume mediation talks to agree a restructuring deal for the spectrum-rich business, which has been in Chapter 11 bankruptcy since May 2012.
Judge Shelley Chapman told the parties to get around the table and raised the prospect of converting the case to a Chapter 7 liquidation if an agreement could not be reached, according to a Reuters report from inside the Manhattan court room.
In response, LightSquared’s lawyers asked for more time to find a settlement. They said that the company still had valuable assets and hundreds of jobs were on the line, the report said.
The court has pushed back the bankruptcy confirmation hearings from 20 October to 10 November, and Judge Chapman has directed the stakeholders to find a broad consensus.
The judge dismissed a restructuring plan hatched by LightSquared’s hedge fund owner Harbinger Capital Partners and two creditors – Mast Capital and JP Morgan – in August, which would hand some of the venture’s spectrum to creditors.
Harbinger said its plan would inject new money for the assets of LightSquared Inc, which holds a smaller swathe of spectrum than the company’s main LightSquared LP unit.
It would involve US$460m in new DIP financing, of which roughly US$360m would be converted into exit financing, and US$100m in revolving exit financing. It would also see the issuance of new debt and equity instruments to wipe out Inc’s existing claims.
Judge Chapman said she would look at the breakaway plan in the confirmation hearings but described it an attempt to “hijack” the case, the report said.
LightSquared’s Chapter 11 process had at one point managed to whittle down competing restructuring proposals to just one, but this was thrown out once it was put to Chapman because it was unfair on satellite TV magnate Charlie Ergen, who owns the largest proportion of LightSquared debt through his SPSO vehicle.
LightSquared filed for voluntary reorganisation back in May 2012 after its spectrum was found to interfere with GPS technology. The company is still talking with regulators for a way around this issue.